Let’s make it official.

LPL Financial agreed this week to acquire the Mariner Advisor Network, a unit of Mariner that supports 367 financial advisors managing roughly $31 billion in assets. The deal also includes Private Advisor Group, a hybrid RIA in which LPL holds a minority stake, as a buyer. But why would LPL buy a business where the advisors are already affiliated with it? While LPL had long supported the network through its platform, bringing it closer allows the firm to capture more of those assets, while giving Mariner an exit from a business line that’s no longer core to its RIA strategy. Two industry consultants viewed the deal as a win for the firms involved, while also reflecting a broader shift toward giving advisors more flexibility in structuring their businesses.

“When you’re running a big RIA [like Mariner], and you take on this hybrid stuff, it just doesn’t fit and it drags on valuation,” said Bill Willis, founder of Willis Consulting. “The pure RIA gets the highest multiple, so maybe this is a little bit of cleanup duty to get back to its pure self.” He added that for LPL, the deal is both strategic and profitable, as the firm now controls more of the custody and clearing economics.

Kind of a Big Deal

While not as glitzy as LPL’s acquisition of Commonwealth last year, this latest transaction is still a deal between two of wealth management’s biggest players. “It speaks to LPL’s appetite for growth and scaling up its business,” said Marcus Samaan, chief growth officer at recruiting firm Terrana Group. “We’ve seen private equity drive up the stakes and the cost of acquiring books of business, so this race to accumulate assets and keep them closely held is becoming increasingly competitive.”

Details of the deal include:

• Some 223 advisors will continue operating on their existing LPL platform with uninterrupted service for their clients and businesses, while gaining access to an expanding suite of wealth management and business-support solutions.
• Meanwhile, 144 hybrid advisors will transition to Private Advisor Group’s hybrid RIA model, where they will maintain their multicustody relationships and continue operating on the same LPL platform.

“This is an ideal outcome for these advisors, enabling them to broaden their relationship with LPL while maintaining stability and continuity for the clients they serve,” Marty Bicknell, Mariner CEO, said in a statement.

Go Your Own Way. The broader wealth management landscape is shifting quickly. Competition for advisors is intensifying, the RIA model continues to gain ground and large firms like LPL are leaning on scale and technology to consolidate their position. That dynamic is giving advisors more flexibility than ever, Samaan told Advisor Upside. “I can’t imagine a better time to be an advisor,” he said. “The ability to design your own practice and create the business model that best suits you and your clients is now more available than ever.”

Wall Street is practically drowning in money.

It’s a major week for earnings reports and the numbers have been consistently positive with big banks and wealth managers announcing better-than-expected figures for revenue and client assets. Following strong reports on Tuesday from JPMorgan, Wells Fargo and particularly Citigroup, Bank of America and Morgan Stanley added to the sector’s earnings party yesterday with their own glowing results. Bank of America’s net income rose 17%, for example, to $8.6 billion during the first quarter. At Morgan Stanley, net income climbed 30% to $5.6 billion. It’s a boon for wealth managers and could be a sign of what’s to come as the industry heads into the second half of the year.

There’s a reason why banks have the tallest corporate office buildings in pretty much any big city.

Managing Money Management

Bank of America’s net income from global wealth and investment management came in at $1.3 billion for the quarter, with revenue up 12% from a year earlier due to higher management fees and assets under management. At Morgan Stanley, income and revenues were both up, thanks in part to higher trading activity during the quarter and net new assets of $118 billion, along with $54 billion in fee-based asset flows.

The figures from other banks this week were also reasons for optimism in the sector:

• Citi’s net income rocketed 42% over a year, to $5.8 billion, which is credited to CEO Jane Fraser’s multi-year streamlining of the bank’s structure into five core businesses.
• Meanwhile, JPMorgan Chase’s profit surged 13% to $16.5 billion, with stock-trading results contributing to that.
• At Wells Fargo, profit rose less dramatically, up 7% to $5.25 billion, thanks in part to its book of loans being at a six-year high and its traders having a good quarter.

Certainly Uncertain. Still, company leaders on recent calls pointed to uncertainty stemming from the Iran war and the rise of AI, even as the latter also presents opportunities. Bank of America, for example, has fewer employees today than it did in 2007, before it bought Merrill and Countrywide, thanks to its uses of technology, CEO Brian Moynihan said during the firm’s call with analysts. While attrition is behind a drop of roughly 1,000 full time positions, the company has 90 installations giving all 200,000 employees access to AI, he said. “We’re still in the early stages of what all this will do, but we’re seeing real benefits out of it today.”

ChatGPT AI’nt got nothing on me.

Almost 80% of retail investors globally said they’ve incorporated AI into their investment research process, according to a survey from the analytics firm Bridgewise. More than half of people who use artificial intelligence said they’re very confident in its guidance. And even a portion who have never used the tech still say they would be confident in it. Advisors aren’t surprised by those figures, but they are worried by them, concerned AI has many pitfalls and hallucinations the average investor might not be able to recognize. The question isn’t whether AI should be part of financial decision-making, but what role human advisors will choose to play alongside it, said Amy Mullen, CFP and president of Money Quotient.

“Competing on information alone is a losing game,” she told Advisor Upside. “The advisors who remain indispensable will be the ones who create space for reflection, guide clients through transitions, and help them design lives that are aligned with their values, not just optimized spreadsheets.”

The Why of AI

When it comes to investing, the three main reasons people consult AI are to double-check their financial decisions, speed up their research and discover new investing opportunities. “By the time one becomes a frequent user … the true value sought and found is the ability of AI to surface global insights and hidden opportunities that remain invisible to those relying on manual processes,” Bridgewise said in the survey

• The report also found: North Americans and Europeans are the least likely to use AI for investment management, while almost a quarter of those in the Middle East said they consult AI for every investment query.
• Roughly a quarter of investors who use AI believe it gives them an edge over those who don’t.
• Men were more likely to say AI gives them a strategic advantage, while women were more skeptical and uncertain.

Are You Sure About That? While AI can be a great starting place to break down financial topics into easily understood language, cracks can start to show with queries that are even marginally more complex, said Gabbi Cerezo, a CFP with Sustain Financial. “I recently met an inexperienced tax preparer who told me he uses AI to help provide tax advice,” she said. “I double-checked everything he had advised my client on and found it to be wrong, which would have cost my client hundreds to thousands of dollars in mistakes.”